First-time buyer affordability: the five numbers to work out before you book a viewing

UKCalc Editorial Team · Last reviewed: 25 September 2026 · Rates: 2026/27 tax year unless stated otherwise

Before booking viewings, work out five numbers: the deposit you can actually use, the loan-to-value (LTV) that deposit creates, a realistic borrowing range, the mortgage rate you want to model and the monthly repayment you could comfortably sustain.

UKCalc can help you model those numbers before you start looking. Where you need personalised help understanding lender criteria and comparing mortgage options, Habito by Monzo provides fee-free mortgage advice, helping a buyer understand lender criteria and compare available mortgage options based on their circumstances. Habito does receive commission from lenders.

The maximum you might be able to borrow and the amount you would be comfortable borrowing are not necessarily the same number. Run the calculation both ways: start with the property and test the repayment, but also start with the monthly payment you would be comfortable sustaining and work backwards.

First-time buyers are borrowing a larger share of their home's value

First-time buyers accounted for 52.8% of UK mortgage sales in 2025, according to ONS Mortgage statistics, UK: 2025, published 18 September 2026. The median LTV for first-time buyers was 85.6%, its highest level since before the financial crisis, while the average first-time-buyer loan-to-income ratio was 3.6.

There was also substantial regional variation: median first-time-buyer LTV was 80.2% in London, compared with 89.8% in the North East, 89.7% in Scotland and 88.9% in Wales.

Those figures describe lending that took place across the market; they are not borrowing rules for an individual applicant.

1. How much deposit do you actually have available?

The first number is not simply the balance of your savings account. It is the amount you can put towards the property after allowing for the other costs of buying and deciding how much cash you need to keep back.

• On a £250,000 home, a 5% deposit is £12,500.
• On a £250,000 home, a 10% deposit is £25,000.

A larger deposit means borrowing less and can also move you into a lower LTV band, potentially giving you access to different mortgage products or rates.

The government's permanent Mortgage Guarantee Scheme supports participating lenders offering 91%-95% LTV mortgages, so eligible buyers may be able to purchase with a deposit as small as 5%. The existence of a 95% mortgage does not mean every buyer will qualify for one.

Don't forget the money outside the deposit

Depending on the purchase, costs can include legal and conveyancing fees, surveys, mortgage or valuation fees, moving costs, insurance and property taxes.

For qualifying first-time buyers in England and Northern Ireland in 2026/27, First-Time Buyers' Relief means no Stamp Duty Land Tax is payable on the first £300,000 of a property costing no more than £500,000, with 5% charged on the portion between £300,001 and £500,000. On a £250,000 home a qualifying first-time buyer pays £0 SDLT; at £400,000 the UKCalc figure is £5,000. Different property transaction taxes apply in Scotland and Wales.

If you are using a Lifetime ISA, qualifying savings can currently be used towards a first home costing £450,000 or less, subject to the scheme's conditions, including the 12-month rule.

A useful calculation is: savings - buying costs - cash you intend to retain = usable deposit.

2. What LTV does your deposit give you?

Loan-to-value measures how much of the property's value you are borrowing: mortgage amount ÷ property value × 100 = LTV.

With a £12,500 deposit on a £250,000 property, the mortgage is £237,500 and the LTV is 95%. With a £25,000 deposit, the mortgage is £225,000 and the LTV is 90%.

That extra £12,500 therefore reduces the mortgage by £12,500 and moves the buyer from 95% to 90% LTV. But increasing the deposit can also leave less cash for buying costs, repairs and emergencies.

3. How much can you realistically borrow?

A salary multiple can be useful for rough planning, but it is not a mortgage offer. Under FCA mortgage rules, lenders must take account of income net of tax and National Insurance, committed expenditure and basic essential and quality-of-living costs when assessing affordability.

That means commitments such as student loans, loans, credit cards and childcare can matter alongside earnings. Lenders can also apply different criteria to self-employed, part-time or variable income, previous credit issues and gifted deposits.

Credit history and affordability are related but not the same. A buyer may comfortably afford the monthly repayment yet meet different lender criteria because of past credit issues; equally, a clean credit record does not make a particular borrowing amount affordable. Because criteria differ, one lender's decision does not tell you what the whole market would say.

The ONS average first-time-buyer loan-to-income ratio of 3.6 is market evidence, not an entitlement. Use a borrowing or affordability calculator as a planning tool rather than a promise of what a lender will offer.

4. What mortgage rate should you plan for?

The interest rate changes the cost of the same mortgage considerably. Bank of England Effective interest rates - July 2026, published 1 September 2026, reported an effective rate of 4.45% on newly drawn mortgages. That is a market-wide measure, not a rate any particular first-time buyer is guaranteed to obtain.

For planning, model the same mortgage at several illustrative rates - for example 4%, 5% and 6% - and ask whether the payment would still feel affordable if the eventual rate were higher than expected.

5. What will the mortgage actually cost each month?

Consider a £250,000 home with a £25,000 deposit: the mortgage is £225,000 and the LTV is 90%. UKCalc's repayment calculation gives:

Moving from 4% to 6% over 25 years adds £262.05 a month, or £3,144.54 a year, on the same £225,000 mortgage.

A longer term reduces the monthly repayment in these examples but usually increases the total interest paid because the debt is repaid over longer. A higher rate increases the repayment without changing the amount originally borrowed.

Run it the other way too: if £1,300 a month is the most you would be comfortable paying, at 5% over 25 years that supports a mortgage of roughly £222,000 before any lender assessment.

Use UKCalc's mortgage repayment calculator to change one assumption at a time and test the mortgage at the rate you expect and again at a higher rate.

The number most buyers forget: what is left afterwards?

There is effectively a sixth number worth knowing: how much money will you have left each month after owning the home?

A mortgage payment does not exist in isolation. Homeownership can also mean council tax, energy and water bills, buildings insurance, maintenance and, depending on the property, service charges or other property costs. Then there are existing commitments such as food, transport, childcare, loans, credit cards and student-loan repayments.

So instead of asking only, 'Can I afford a £1,315 mortgage payment?', ask: 'After a £1,315 mortgage payment and the realistic cost of running this home, what would I have left?'

Compare the real cost, not just the headline rate

Compare mortgages using the same loan amount, term and deal period and consider monthly repayment, product or arrangement fees, other charges, early-repayment charges, overpayment rules, the rate after an introductory deal and total cost over the period being compared. A lower headline rate is not automatically the cheaper mortgage once fees are included.

When does personalised mortgage advice become useful?

Calculators are useful for 'what if?' questions. They can show what happens if you increase your deposit, change the mortgage amount, extend the term or model a different interest rate. They cannot tell you with certainty which lender will accept your individual circumstances.

That's where personalised mortgage advice can become useful. Habito by Monzo provides fee-free mortgage advice. Habito does receive commission from lenders. An adviser can help a buyer understand lender criteria and compare available mortgage options based on their circumstances.

Use UKCalc to understand the numbers. Use personalised advice where you need help interpreting lender criteria and comparing actual mortgage options.

What should a first-time buyer have ready before applying for a mortgage?

• How much of your savings you can genuinely use as a deposit.
• How much you need to retain for purchase costs and a cash buffer.
• The LTV your deposit would produce.
• A realistic borrowing range.
• Your existing monthly financial commitments.
• Repayments at several possible mortgage rates.
• How repayments change with a different mortgage term.
• The likely ongoing cost of owning the property.
• How much money you would have left each month afterwards.

Frequently asked questions

How much deposit does a first-time buyer need for a mortgage?

Many first-time buyers look at deposits of 5% or 10% of the purchase price, although the amount required and the products available depend on the lender and individual circumstances. On a £250,000 home, 5% is £12,500 and 10% is £25,000.

How do lenders work out how much a first-time buyer can afford?

Lenders consider more than salary. Mortgage affordability includes income, regular expenditure and existing financial commitments, while lenders also apply their own criteria. A mortgage affordability calculator is useful for planning but cannot guarantee what a particular lender will offer.

Should a first-time buyer use a mortgage broker or apply directly to a lender?

Either can be appropriate. Applying directly means dealing with that lender and its products, while a broker can help compare mortgage options and explain lender criteria. Habito by Monzo - Monzo's mortgage experts - provides fee-free mortgage advice. Habito does receive commission from lenders.

What should first-time buyers compare besides the mortgage interest rate?

Compare monthly repayments, product fees and other charges over the same period and using the same mortgage amount and term. Also check early-repayment charges, overpayment rules and what happens when an introductory rate ends.

Mortgage calculations and examples are for illustration and planning rather than a mortgage offer or guarantee of eligibility. Mortgage products and lender criteria vary.

Related UKCalc tools and guides

Every figure in this article is either a published source fact or a UKCalc calculation from stated inputs.